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Photo of attorneys Shelley Slafkes and Bruce Levitt
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What You Need To Know About Discharging Homeowners Association Fees In Bankruptcy

Are Homeowners fees and assessments dischargeable in bankruptcy? We hear this question a lot from people who live in condominiums or communities that require the homeowner to be a part of a homeowners association (“HOA”) which shares communal maintenance fees. The answer is — It depends on whether they became due before or after you filed for bankruptcy.

Homeowners Dues/Fees Assessed Before Bankruptcy Filing

The general rule is that in a Chapter 7 bankruptcy, HOA fees and assessments that became due before the filing of a bankruptcy (pre-petition) are dischargeable. These HOA fees are treated basically the same as credit card debt.

However, you remain liable for all HOA dues that accrue after the filing of the bankruptcy (post-petition), as long as you own the home (remain on the title to the property). Bankruptcy Code Section 523(a) (16).

Lawsuits For HOA Dues

If the HOA has already filed a lawsuit against you before you filed for bankruptcy, the bankruptcy will stop the lawsuit and the HOA fees demanded by the lawsuit will be eliminated.

Wage Garnishments

If your HOA garnished your wages for dues assessed before your bankruptcy was filed, bankruptcy will stop the wage garnishment.

HOA Dues/Fees Assessed After Bankruptcy Filing

HOA fees that become due after a bankruptcy petition is filed do not get discharged (are not eliminated) in the bankruptcy.

Debtors are frequently surprised to find that they are still personally liable for HOA fees after filing for bankruptcy. This is true even though they have moved out and/or made it known their intent in the bankruptcy that they are surrendering their property back to the bank. After filing a Chapter 7 bankruptcy, debtors are still liable for the homeowners fees as long as they still continue to legally own the home, whether they have abandoned it or not.

What Does This Information Mean For You?

Even if the property is in foreclosure, the post-petition HOA fees and assessments remain your responsibility until the foreclosure sale actually takes place and you no longer own the property; or until some other transfer of title occurs such as a short sale or deed in lieu of foreclosure

What Happens If I Do Not Pay?

The HOA will be able to sue you for the post-filing dues, and you won’t have the chance to discharge those in bankruptcy for another eight years.

Free Legal Consultation About Discharging HOA Dues

Contact our New Jersey lawyers to schedule a free initial consultation about your financial situation, including your homeowner association debt. You can reach our attorneys by filling out our online form or by calling 973-323-2953.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.